Don’t miss your money: The 5 most common missed tax deductions
If you make a mistake when filing your taxes, the government may owe you money that you will never see. Many of the errors are simple ones, too—or a basic lack of knowledge.
Turns out, a little knowledge can be worth big bucks.
Here are the five most commonly missed tax deductions, according to Lisa Greene-Lewis, CPA with TurboTax:
1. The small, day-to-day things you do.
Many of your regular tasks, like day care or donations to charities, can be deducted. “People get busy and don’t realize the things they do in their every-day life can be deductible, but with TurboTax, we remind you of those things and ask you questions related to your life,” Greene-Lewis says.
2. Your retirement contributions.
You can contribute up to $5,500, or $6,500 if you are older than 50, and the amount you contribute may be deductible. Best of all, this is a tax move you can make even after Dec. 31 of the taxable year. You can contribute to retirement all the way up to the date that you file.
3. Your new home.
People often forget that they can deduct points if they purchase a home. You can even deduct points when you refinance.
4. Business expenses.
Many people don’t deduct business expenses because they think it takes so long to itemize. That’s why there’s now a simplified method: a flat deduction you can claim, instead of having to add up every last dime.
5. Big life events.
A lack of knowledge leads some people to forget to report life events, such as a marriage or a new baby. Luckily, TurboTax asks you a series of simple questions in a language you can understand, and, based on your answers, it lets you know exactly what tax deductions and credits are available.
“That’s where we come in,” Greene-Lewis says. “You don’t need to know the tax laws. We ask you simple questions, but on our back-end it’s all programmed according to the IRS tax laws.”
Other common mistakes people make when filing their taxes:
- Paying someone hundreds of dollars to do their taxes when they can easily and accurately file their federal taxes for free. With TurboTax you can file your simple federal tax return for free.
- Unnecessarily complicating the process. Greene-Lewis says 60 million people actually have a simple tax return with one W-2. These people are dropping hundreds of dollars to get a tax return prepared when they could very easily do it themselves and save money.
- Mailing your tax return instead of e-filing. About 75 percent of people received a tax refund last season, and those refunds were close to $3,000 per person. If you want to get that money as quickly as possible, snail mail isn’t the best option. E-file with direct deposit gets you the money the fastest. Plus, when you mail it, you don’t know when the government receives it or if it’s accepted. When you e-file online, you can track the progress of your e-file and your tax refund.
- In addition, e-filing cuts down on errors that people make when they do taxes the old-fashioned, pen-and-paper way. When you e-file using TurboTax’s software, you will know right away if you have made any errors, and you can correct them before filing. If you mail it, you won’t know until it goes through processing. TurboTax also runs through thousands of error checks and double checks your tax return as you go to help make sure there are no mistakes.